{"id":21766,"date":"2024-04-29T07:08:14","date_gmt":"2024-04-29T07:08:14","guid":{"rendered":"https:\/\/www.insurancejournal.com\/?p=771886"},"modified":"2024-04-29T07:08:14","modified_gmt":"2024-04-29T07:08:14","slug":"rbnz-says-insurance-may-become-unaffordable-for-high-risk-homes","status":"publish","type":"post","link":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/2024\/04\/29\/rbnz-says-insurance-may-become-unaffordable-for-high-risk-homes\/","title":{"rendered":"RBNZ Says Insurance May Become Unaffordable for High-Risk Homes"},"content":{"rendered":"<p><img decoding=\"async\" src=\"https:\/\/www.insurancejournal.com\/app\/uploads\/2024\/04\/flooding-caused-by-cyclone-gabrielle-in-new-zealand-getty-580x387.jpg\"><\/p>\n<div><img decoding=\"async\" src=\"https:\/\/www.insurancejournal.com\/app\/uploads\/2024\/04\/flooding-caused-by-cyclone-gabrielle-in-new-zealand-getty-scaled.jpg\" class=\"ff-og-image-inserted\"><\/div>\n<ul class=\"nav nav-tabs tabs tabs-entry\">\n<li class=\"active\"><a href=\"https:\/\/www.insurancejournal.com\/news\/international\/2024\/04\/29\/771886.htm\">Article<\/a><\/li>\n<li><a href=\"https:\/\/www.insurancejournal.com\/news\/international\/2024\/04\/29\/771886.htm?comments\" rel=\"nofollow\">0 Comments<\/a><\/li>\n<\/ul>\n<div class=\"article-content clearfix\">\n<p class=\"bloomberg\">New Zealanders who own properties in areas prone to flooding or earthquakes may find they can\u2019t afford insurance or may not be offered cover for specific risks, according to the Reserve Bank.<\/p>\n<p>Rising premiums or the inability to insure are a signal to homeowners that they need to reduce exposure to risks, which could include moving away from the area, the <a href=\"https:\/\/www.rbnz.govt.nz\/hub\/publications\/financial-stability-report\/2024\/may-2024\/fsr-may-24-special-topic-2\" target=\"_blank\" rel=\"noopener\">RBNZ said in a report<\/a> Monday in Wellington. The central bank said so-called insurance retreat is also a long-term challenge for the financial system.<\/p>\n<div class=\"bzn bzn-sized bzn-intext\">\n<ins data-revive-zoneid=\"79\" data-revive-block=\"1\" data-revive-id=\"36eb7c2bd3daa932a43cc2a8ffbed3a9\"><\/ins> <\/div>\n<p>\u201cOwners of properties where natural hazard risks have already manifested through claims are unlikely to be able to obtain comparable cover in the future, unless there has been a substantial mitigation of the now known risks,\u201d the central bank said. \u201cEven if the complete withdrawal of insurance availability in certain areas is some time away, owners of high-risk properties may find insurance increasingly unaffordable.\u201d<\/p>\n<p>New Zealand insurers have moved to risk-based pricing, pushing up costs in earthquake-prone areas such as capital city Wellington. More frequent climate change-related weather events \u2014 including the flooding and landslides caused by Cyclone Gabrielle in early 2023 \u2014 are also impacting prices and posing the question of whether some houses should be rebuilt in risky areas.<\/p>\n<p>\u201cIt is difficult to pinpoint if and when insurers will completely withdraw the availability of insurance for certain properties, areas or risks, although it could occur relatively quickly given that contracts are typically annual,\u201d the RBNZ said. \u201cWithdrawal would tend to first occur in communities where these physical risks are already well known.\u201d<\/p>\n<p>A potential outcome of risk-based pricing is that insurers begin to unbundle different risks, particularly if one type of peril is a dominant driver of the unaffordability of premiums, it said. For example, unbundling could take the form of removal of flood cover for a flood-prone property in an area with low seismic risk.<\/p>\n<p>The RBNZ said more work is needed to improve collection of natural hazard data, which will help insurers\u2019 risk modeling and improve the price signals.<\/p>\n<p>Banks need to be conscious of the ongoing insurability of the properties they lend against, which will require greater scrutiny in their lending decisions, the RBNZ said.<\/p>\n<div class=\"bzn bzn-sized bzn-intext-2\">\n<ins data-revive-zoneid=\"162\" data-revive-block=\"1\" data-revive-id=\"36eb7c2bd3daa932a43cc2a8ffbed3a9\"><\/ins> <\/div>\n<p>\u201cBanks also need to pay close attention to insurance coverage given the increasing risks of under-insurance of high-risk properties over time,\u201d it said. \u201cBanks need to work with insurers to obtain better and more regular information on mortgaged properties\u2019 insurance status.\u201d<\/p>\n<p><em>Photograph: Flooding caused by Cyclone Gabrielle in Awatoto, near the city of Napier, in New Zealand, on Feb. 14, 2023. Photo credit: STR\/AFP\/Getty Images<\/em><\/p>\n<div class=\"copyright-notice quiet\">Copyright 2024 Bloomberg.<\/div>\n<\/p><\/div>\n<div class=\"article-poll\" data-post=\"771886\">\n<div class=\"article-poll-vote\">\n<p>Was this article valuable?<\/p>\n<\/p><\/div>\n<div class=\"article-poll-feedback voted-no\">\n<form class=\"feedback-form\">\n<p>Thank you! Please tell us what we can do to improve this article.<\/p>\n<p> <textarea placeholder=\"Enter your feedback...\"><\/textarea> <button type=\"submit\" class=\"submit\" disabled>Submit<\/button> <button class=\"cancel\">No Thanks<\/button> <\/form>\n<\/p><\/div>\n<div class=\"article-poll-feedback voted-yes\">\n<form class=\"feedback-form\">\n<p>Thank you! <span class=\"percent\"><\/span>% of people found this article valuable. Please tell us what you liked about it.<\/p>\n<p> <textarea placeholder=\"Enter your feedback...\"><\/textarea> <button type=\"submit\" class=\"submit\" disabled>Submit<\/button> <button class=\"cancel\">No Thanks<\/button> <\/form>\n<\/p><\/div>\n<div class=\"article-poll-more-articles\">\n<p class=\"thank-you-text\">Here are more articles you may enjoy.<\/p>\n<\/p><\/div>\n<\/p><\/div>\n<div class=\"subscribe-banner subscribe-banner-in-content-2\">\n<div class=\"content\">\n<h4>The most important insurance news,in your inbox every business day.<\/h4>\n<p>Get the insurance industry&#8217;s trusted newsletter<\/p>\n<\/p><\/div>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Article 0 Comments New Zealanders who own properties in areas prone to flooding or earthquakes may find they can\u2019t afford insurance or may not be offered cover for specific risks, according to the Reserve&#46;&#46;&#46;<\/p>\n","protected":false},"author":1,"featured_media":21767,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[],"tags":[170,24,171,739,740,1,741],"jetpack_featured_media_url":"https:\/\/blog.lifeinsurance-orleans.ca\/wp-content\/uploads\/2024\/04\/rbnz-says-insurance-may-become-unaffordable-for-high-risk-homes.jpg","_links":{"self":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/21766"}],"collection":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/comments?post=21766"}],"version-history":[{"count":0,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/21766\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/media\/21767"}],"wp:attachment":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/media?parent=21766"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/categories?post=21766"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/tags?post=21766"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}